Basis for calculating RMD for Inherited IRA ?

[genelawson566]

Hi, Mom died in December 2023, she did take her 2023  RMD prior to her death.  Today, Feb 8, 2024, her IRA account was transferred into my name, I'm just an ordinary beneficiary.    I know I have to abide by the 10 yr rule, I am 76 years old, so I need to take an RMD this year.   Question:  when I use the RMD calculator, what amount/date do I use as the basis?  The value of the account in December , the date of Mom's death?  Or December 31st?  Or today's date when the account was actually transferred to me?  

Thank you !

[fanfare · Accepted solution]

to calculate the RMD for any year, (2024)

use the year end value of the Inherited IRA at the end of the previous year (Dec 31, 2023)

@genelawson566 

[fanfare]

When you are subject to the 10-year liquidation rule for newly inherited IRAs,
to spread the tax impact most evenly over the ten years, and regardless of the Year-End Value,
your divisor should be :10,9,8 . . . 2, 1
OR,    11 - N where N is the number of the distribution year. (Beneficiary RMDs start in the year after the year of death)

If the owner died in 2020, the beneficiary would have to fully distribute the plan by December 31, 2030. which is the tenth distribution year.
the portion to distribute is 1 / 1 or 100%.

In the eighth year you would take out one third of the IRA, there being three years to go.
If you are a young beneficiary, or even not so young, this rule would generate much larger distributions than the RMD based on Pub590B formulas.

At a very high age, the Pub590B formula will overtake this calculation and require a larger RMD in the beginning.

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Your divisor at age 78 will be greater than 10.

Using the 509B divisor means you will have smaller yearly RMDs and a large balloon distribution in the tenth year.

@genelawson566